House price inflation is still positive but starting to slow as sales drop, according to Zoopla.
Annual house price inflation is now down to an average +1.4% across the UK.
The portal’s latest data reflects sales agreed earlier in the year, before the full impact of higher rates was felt, meaning price inflation is set to slow further into the autumn unless mortgage rates fall further and sales recover.
The North East and North West are currently the strongest performing regions in England, seeing growth of 3.5%, while those in Scotland, where there remains a scarcity of supply with fewer homes for sale than last year, are registering growth of +3%.
At the other end of the spectrum, London is facing its ninth consecutive month of negative annual house price growth, with this sitting at -0.2% in May.
The South East is similarly low at -0.3%, making getting the asking price right is essential and the difference between moving and not moving this year for sellers in the South.
Those falling sales have been triggered by political uncertainty caused by the Labour leadership change and inflation worries triggered by the US-Iran conflict, says Zoopla.
It’s produced figures this morning showing that three in five homes listed for sale since January are yet to find a buyer, as sales agreed fall by -7% year-on-year.
It also reveals that buyer demand has fallen by 15% year-on-year across the UK, with the combination of political uncertainty and higher borrowing costs hitting buyers differently across the country.
A jump in mortgage rates in April has added to £232 to the average first time buyer’s costs in London, but just £66 in the North East – with this gap reflecting differences in market performance across the UK.
The portal emphasises that this is why setting the price right from day one has never mattered more for sellers who want to move this year.
Higher mortgage rates and political uncertainty have shrunk the pool of committed home buyers, pushing sales agreed to 7% below last year.
“A change of Prime Minister and questions over future tax and spending priorities in the Autumn Budget have added to the uncertainty” warns Zoopla.
At the same time, buyer demand has fallen by 15% YoY, with more people taking a wait-and-see approach until the outlook becomes clearer.
It continues: “However, this is not the first time that the market has absorbed economic and political uncertainty, with the 2022 mini-budget triggering a sharp fall in sales agreed of more than 20%, with the market recovering once mortgage rates stabilised.”
Richard Donnell, executive director at Zoopla, comments: “Higher mortgage rates have hit sales and squeezed affordability for home buyers alongside increased political uncertainty. The impact is less severe than what the market faced after the 2022 mini-budget, and mortgage rates have started to fall.
“It’s a buyer’s market across much of the South right now, but motivated sellers in northern England and Scotland are still finding buyers at broadly last year’s pace which shows the housing market is not moving at one speed.
“The national picture can only tell you so much, and local market conditions vary considerably across the country.
“The most important step, whether you are buying or selling, is speaking to a local agent who knows what is actually happening on your street.
“For sellers still waiting for an offer, the conversation to have is about price. Correctly priced homes are selling, while overpriced homes are sitting.
“For buyers, rates are falling, there is more choice of homes for sale than a year ago and motivated sellers are willing to negotiate. If you are ready to move, conditions are more favourable than they were three months ago.”
This article is taken from Landlord Today